BALTIMORE, Maryland - Diane L. McFarland, age 51, of Frostburg, Maryland,
was convicted today of theft from a program receiving federal funds, wire fraud
and mail fraud in connection with a scheme in which she stole funds intended
to purchase reading materials for the elementary school students and to reimburse
elementary school teachers for their training expenses, announced United States
Attorney for the District of Maryland Rod J. Rosenstein.

According to the evidence presented at trial, while serving as the principal
of Cash Valley Elementary School located in LaVale, Maryland, McFarland stole
approximately $18,000 in federal funds granted to the school and the Board of
Education of Allegany County during the 2002, 2003 and 2004 school years. Witnesses
testified that McFarland stole the funds by submitting fraudulent claims for
reimbursements relating to a federal grant program called the Success for All
Program, in two ways:

First, testimony at trial showed that McFarland obtained federal funds on the
pretense that they were reimbursements to herself for purchasing books and educational
materials for the school. McFarland submitted fraudulent invoices and statements
for books and materials she never purchased. McFarland obtained about $12,000
in the 2003-2004 school year and about $4,100 in the preceding two school years
through this means.

Second, testimony also showed that McFarland kept funds that were intended
to reimburse elementary school teachers for expenses they incurred attending
Success for All Program training conferences in Atlanta, New York, San Francisco
and San Antonio. In relation to the Atlanta trip, for example, McFarland submitted
fraudulent receipts to the Board of Education of Allegany County in order to
give the impression that the teachers had spent approximately $2,160, when in
fact they had spent only $773. McFarland then did not reimburse the teachers
for their real expenses, instead keeping the funds for herself.

The sentencing guidelines suggest a range of 18-24 months imprisonment for
this crime, although the statutory maximum sentence is 20 years imprisonment
and a $250,000 fine. U.S. District Judge Richard D. Bennett has scheduled sentencing
for September 15, 2006.

United States Attorney Rod J. Rosenstein commended the Federal Bureau of Investigation, the Department of Education, Office of Inspector General and the Combined County Criminal Investigation Unit of Allegany County (C3I) for their investigative work. Mr. Rosenstein thanked Assistant U.S. Attorneys Michael J. Leotta and Stephen M. Schenning, who prosecuted the case.